What are the roles in a life insurance contract? There are three important positions in every life insurance contract:
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Primary beneficiary The policy owner’s first choice to receive the death benefits. This person must be alive at the time the insured dies in order to receive his/her share of the death benefit. Contingent beneficiary If the primary beneficiary dies before the insured does or doesn’t qualify as a beneficiary under the policy, the contingent beneficiary is paid his/her share of the death benefits. Policy Owner The person, entity, partnership or representative who owns the policy, and who has the ability to exercise the rights granted in the policy.
Insured The person whose death triggers the insurer’s obligation to pay the death benefits.
Beneficiary The person(s) selected to receive the death benefits when the insured dies.
Things to remember • Remember to periodically review and maintain your beneficiary designation. Don’t “set it and forget it”. The beneficiary named when life insurance is obtained isn’t necessarily the right beneficiary at a later date. • Consider naming contingent beneficiaries. It’s important to have a “backup” plan. Contingent beneficiaries are just that—one or more persons who could receive your assets if your primary beneficiary dies or is not eligible. • When naming minor children as beneficiaries, it’s important to know that life insurance benefits cannot be paid directly to a minor. Some states have adopted the Uniform Transfers to Minors Act (“UTMA”), which allows a minor to receive such funds once a Custodian is named or if the amount payable is less than a specified amount based on specific state law. If the amount payable is greater than allowed under the UTMA, there are procedures in place to enable the life insurance proceeds to be held with the insurance company until the child reaches adult age. • Remember to submit a new beneficiary designation form after a life event. Whenever a major life event takes place, such as a marriage, divorce or the birth of a child, take the time to review your beneficiary designations. • When designating a beneficiary, be sure to clearly identify the beneficiary. Make the designation clear by stating the beneficiary’s full name and relationship to the insured/owner (e.g. “Jennifer J. Johnson, Insured’s daughter”). You also will be asked to provide their date of birth, Social Security Number, telephone number and street address.
This material is intended for general and educational purposes only; it is not intended to provide legal, tax or investment advice. Please consult an independent legal or financial advisor for specific advice about your individual situation. This is a summary of benefits only. A complete description of benefits, limitations, exclusions and termination of coverage will be provided in the certificate of insurance and riders. All coverage is subject to the terms and conditions of the group policy. If there is any discrepancy between this document and the group policy documents, the policy documents will govern. To keep coverage in force, premiums are payable up to the date of coverage termination. Group Term Life Insurance is underwritten by ReliaStar Life Insurance Company (Minneapolis, MN), a member of the Voya® family of companies. Product availability and specific provisions may vary by state. ©2022 Voya Services Company. All rights reserved. WLTP0188043. CN2117293_0524 172672-05012022 lightbulb-on Helpful tips While beneficiary decisions may appear simple, they have the potential to become complicated and difficult to implement. Designating one’s beneficiaries and reviewing them on a regular basis or when life events occur is important, as these designations are the mechanism for distributing the policy’s federal income tax-free death benefit under current tax law. Review your certificate of insurance and any riders for a complete description of beneficiary provisions, benefits, limitations, exclusions and termination of coverage.
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